Student Aid in Obama's 2013 Budget Request

Contact: Haley Chitty
Director of Communications
(202) 785-6959  

February 10, 2012 -- The Obama administration plans to kick off the Fiscal Year (FY) 2013 budget process on Monday by releasing the President's FY2013 Budget Request. The budget request serves as a baseline for budget negotiations in the coming months. Administration officials have said that the FY13 Budget request will include additional details about the college affordability policy proposals mentioned by President Obama in his recent State of the Union address.

The National Association of Student Financial Aid Administrators (NASFAA) is pleased that the Obama administration has made college affordability a top priority and we are anxiously awaiting additional details. NASFAA will post additional details online as they become available.

Here is what to look for in the President's FY 2013 budget request:

Student Loan Interest Rate

The Obama administration wants to prevent the interest rate on subsidized Stafford loans for low-income students from doubling (from 3.4% to 6.8%) on July 1, 2012. Keeping this interest rate at 3.4% will be expensive (some estimate as much as $5 billion a year). The budget request should have an estimate for how much it will cost to keep the interest rate at 3.4% and could include modifications to the student aid programs to offset the cost of keeping the interest rate at 3.4%.

Pell Grants

The Pell Grant program is projected to run a small surplus in FY 2013, but then faces a $7 billion shortfall in FY 2014. It is unknown if the budget request will address the projected shortfall for FY 2014.

Campus-Based Aid

President Obama wants to expand the Federal Work Study and Perkins Loan programs by $10 billion and modify how these funds are distributed to reward schools that keep tuition and fees down. The budget could include additional details about how the administration wants to modify the distribution of these funds, but administration officials have said they are still working with the higher education community to redesign the distribution formulas so many questions are likely to remain outstanding.

This is not the first time the administration has proposed revising the Perkins Loan program. In its 2009, 2010, and 2011 budget requests, the administration proposed expanding the program, making it unsubsidized, and increasing the interest rate. It is unknown if this year’s budget request will be the same as previous proposals.

Race to the Top for Higher Education

President Obama wants to create a $ 1 billion program like "Race to the Top" for higher education to reward states that keep college affordable. The 2013 budget request could include additional details about this plan and details about how the administration would pay for this proposal.

Consumer Information

The administration is working to increase the quality and quantity of higher education consumer information so students and families can make informed decisions and compare colleges. These proposals will likely have a minimum impact on the budget, but additional details about these efforts may be included in the budget request.

Spending Offsets

The President has set an ambitious agenda to make college affordable and accessible. These proposals will not be inexpensive to implement and the budget request is expected to include recommendations to modify the student aid programs in order to create savings to pay for these proposal. This could include changes to further limit eligibility for certain student aid programs or modifications to make federal student loans more expensive to generate additional revenue.


The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents nearly 20,000 financial aid professionals at 2,800 colleges, universities, and career schools across the country. Each year, financial aid professionals help more than 16 million students receive funding for post secondary education. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators. For more information, visit